Tag: salary sacrifice

Important changes are coming into effect which may affect you as an employee or employer.

Salary Sacrifice
From 6 April 2017, a shift in legislation means that the tax exemptions for most benefits will be lost if provided under a salary sacrifice or flexible benefits arrangement. The only benefits to retain their salary sacrifice tax exemption will be Pensions, Childcare Vouchers, Cycle to Work scheme bicycles and Low Carbon Emission vehicles. This means that Employers will need to look at how they offer benefits such as Private Medical Schemes where perhaps family members are added via salary sacrifice, Gym memberships, Season Ticket Loans to name a few. Arrangements entered into pre 6 April 2017 will be honoured until April 2018 or until the scheme/arrangement renewal date – whichever date is earliest.

Apprenticeships
A hot topic currently is Apprenticeships.

From 6 April 2017, the way the government funds apprenticeships in England is changing. Some employers will be required to contribute to a new Apprenticeship Levy, and there will be changes to the funding for apprenticeship training for all employers. All employers operating in the UK, with a pay bill over £3 million each year, will be required to invest in apprenticeships, regardless of whether they hire apprentices or not.

This means that for those Companies who do qualify to pay the Levy, they will be required to use the Apprenticeship Service for assessment and training of apprentices from April 2017. For those Companies who do not qualify for payment of the Levy, they will not need to use the Apprenticeship Service until 2018.

The current weekly rate of statutory maternity pay is £139.58, or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate. The rate of statutory maternity pay is rising to £140.98 from April 2017. The increase normally occurs on the first Sunday in April, which in 2017 is 2 April.

Also on 2 April 2017, the rates of statutory paternity pay and statutory shared parental pay will to go up from £139.58 to £140.98 (or 90% of the employee’s average weekly earnings if this figure is less than the statutory rate).

The rate of statutory adoption pay increases from £139.58 to £140.98. This means that, from 2 April 2017, statutory adoption pay is payable at 90% of the employee’s average weekly earnings for the first six weeks, with the remainder of the adoption pay period at the rate of £140.98, or 90% of average weekly earnings if this is less than £140.98.

The rates normally increase each April in line with the consumer price index (CPI). A 0.1% fall in the CPI in the year to September 2015 meant that there was no increase to the rates in April 2016. This means that the rates have been frozen since 5 April 2015.

However, the CPI has increased by 1% in the year to September 2016, which is reflected in the rates for 2017/18.
“Their publication well in advance of April 2017 will help employers to plan their budgets for 2017/18, and to prepare amendments to their policies and documents on family-friendly benefits for April 2017.”

The rate of statutory sick pay is also increasing from £88.45 to £89.35. This increase is expected to occur on 6 April 2017. To be entitled to these statutory payments, the employee’s average earnings must be equal to or more than the lower earnings limit. The lower earnings limit is increasing from £112 to £113 in April 2017

Salary Sacrifice on Certain Benefits
Changes coming into effect in April 2017 mean only a limited number of benefits will continue to benefit from tax & NIC’s relief if provided through a salary sacrifice arrangement. These are:

Jury Service
In other HR news, the maximum age for Jury service will be raised from 70 to 75 years old, with the Government saying for the first time it will draw on the “life experience” of pensioners over 70.

If you need any help with HR for your business, Goodwille are here to help. Our HR Manager Jacqui Brown can help you with everything HR-related, get in touch with her on jacqui.brown@goodwille.com if you have any questions on the above or anything else related to UK HR.

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